What to make of Brexit?
Whilst there seems to be panic setting in and which the media, as usual love stirring up, lets look at the facts as they stand today, rather than getting embroiled in the media frenzy.
Both the EU and the UK want to get the withdrawal right – FACT. This is in both our interests, as we both equally stand to lose and gain in equal measure. Only the UK can invoke Article 50 and NOT the EU. In other words, any withdrawal is done in our timeframe and when we are ready. The Bank of England and Chancellor George Osbourne have said they will do whatever it takes to keep the markets stable – again in everyone’s best interests. The has been £250 Billion worth of funds been put aside, should we need to use it. The UK budget deficit is down from 11% of national income and predicted to be under 3% by the end of the year. Plus we currently have low stable inflation.
Research out the other morning from Coutts Bank shows that most political events do not have a lasting impact on investment outlook and they do not see Brexit as an exception. Coutts also say that one of the more reliable warning signs for a big downturn in the markets is the risk of a US recession, which is seen as UNlikely in the next 12-18 months.
The result is of course a surprise to many (and especially the City who were betting the other way) and we all knew the result would be close. The financial markets are currently going through an adjustment to find their new levels and there was always going to be some initial short term turbulence.
We must remember that the bottom line is that this will be a lengthy renegotiation process and it is not the case of flicking a switch one day and getting a new set of circumstances the next. This is going to be very gradual over a minimum of 2 years.
So therefore on the property side, my advice is to hold your nerve. Yes there is financial turbulence occurring currently – but this was always going to be the case.
There is already speculation of the Bank of England reducing interest rates to 0.25%. If they do this, then could mortgage rates be cheaper. If so, it will mean greater property market activity as money is cheap to borrow.
The property market relies on supply and demand. People will always need to buy and sell property. Current local property supply levels remain weak. Therefore there is an argument for property prices locally to hold firm.
The underlying strengths of the UK economy remain in place and property has always been proven to be the best medium to long term investment you can make.
So in conclusion, take your time, hold your nerve and above all, don’t panic!
Listen to my full interview now with the StrayFM news desk (link)